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CAS 1-Classification of Cost
The Cost Accounting Standard 1 (CAS 1) issued by the Council of the Institut...
From Vivekanand
LEC1
From zahidwahla1
1. Allocate costs between cost of goods sold andinventories for internal and external profitreporting
2.
Provide relevant information to help managers makebetter decisions;
3.
Provide information for planning, control andperformance measurement.
Limitations of Financial Accounting
It does not provide detailed cost information fordifferent departments, processes, products, jobs,different services and functions.
It does not set up a proper system of controllingmaterials, supplies.
It is difficult to know the behaviour of costs in financialaccounting as expenses are not classified into fixedand variable, direct and indirect costs.
It does not proved cost data to determine the price of the product being manufactured or the service beingrendered to the consumers.
It does not provide necessary information tomanagement in taking important decisions aboutexpansion of business, dropping of a product line,alternative method of production, buy or make etc.
Financial Accounting Vs. CostAccounting
A firm manufactures three products A, B andC whose costs and revenue figures are givenbelow:
product A Product B Product C TotalMaterials
800070008000 23000Labour500060004000 15000Other Expenses300040003000 10000Sales200002100012000 53000
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Management Accounting
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| Upload Date: | 07/09/2009 |
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